>> checking out the christmas decorations. >> i think it's the pace of the walk. >> he's just kind of strolling through and for a dog to get that close to a christmas tree and not touch anything. >> it's a ball that he could play catch with, just look at him. he said so patiently checking it out. >> we won't have enough time for it right now, but the portion where he looks at himself, that's the best part. >> he sees a stuffed bo, if you will, very, very cute. >> i'll be back here at the top of the hour. "your bottom line" starts right now. all right. thanks, rand i. see you at the top of the hour. the economy is getting better, and that changes everything for the republicans. good morning, everyone. i'm christine romans. for four years the gop blasted the obama economy. he made it worse, they said. his policies were ruinous. the recovery wasn't too slow because of the severity of the financial crisis, no, it was because of the man at the top. three reasons now why every day

that argument by the gop is harder to make. first, the economy is picking up speed. gross domestic product, the broadest measure of the u.s. economy grew 2.7% in the third quarter, much better than the 2% originally report. next, housing is healing. home prices jumped 3.6% in the third quarter, the biggest year-over-year increase in more than two years, according to the s&p case schiller index and energy is booming. new drilling methods are generating jobs and growth. 1.7 million jobs created, 2.5 million jobs creed up over the next year and added up americans see better times ahead, why consume are confidence is at a four-year high. i know, i know, i know. it's not strong nup enough, i agree. it's fragile, you're right. just this week the organization for economic development downgraded its economic forecast and we need to make sure congress doesn't drive us off

the fiscal cliff so evidence is mounting. now is it time for the gop to reposition itself to get in on a brightening economic picture? want to bring in two conservative cnn contributors, anna navarro in cambridge, massachusetts and will cain here with me. republicans lost with a campaign focused on what they turned as a failed obama economy. is it time for them to change their message on the economy? >> well, look, i'm happy you're talking about the economy because i think the lesson that too many republicans and democrats for that matter are taking from this election is it's all about demographics. the republicans lost latinos because of immigration, for example, or the youth for a variety of reasons. those are all true, but focusing on that too narrowly denies that there is a problem with the republicans economic message. here's my small criticism of you, christine. >> make sure it's narrow. >> i think it's a larger macro view over elections. look, republicans have lost five of the last six popular votes

for president. i think the republican economic message is having trouble resonating with the middle class. the middle class seeing how it makes their life better, when pitted against an opponent who says i can do things like address your student loan debt, i can address your health care issues by giving you specific programs. >> you're talking about the whole gifts controversy. >> i think that gives credence to the gifts controversy that shows one party can give you specifics that says this is how i'm going to help your life. the other party is trying to present a broad economic message that's somewhat abstract. >> how do republicans change that message, because we're in the middle of fiscal cliff negotiations, and all you hear are about preserving tax cuts for the wealthiest americans. that just feeds into this lack of connecting to the middle class that's been a problem. >> here's your answer and it's difficult and nuanced. traditionally republicans economic message that resonated with the middle class is our taxes will be lower on you. democrats have co-opted on that. they promise taxes on the middle class but do it simultaneously

with giving high spending that. cannot last forever so republicans have to make people realize that is a utopia that doesn't exist. you can't have low taxes and high spending that democrats are currently promising. >> we've had $520 billion spent on jobless benefits over the past five years, and i bet they are probably pretty evenly divided between republicans and democrats and the big message on government spending has been distorted because we've had a crazy recession. i want to bring in anna because the president built that winning location of african-americans, latinos and women. it's a gone primarily of rich white man. why not let the tax cuts expire for the top 2% of earners and then people in the middle can say, this party is not a party of white men who care about rich people. >> christine, i think it's to the benefit of both sides for the fiscal cliff to be solved,

and i think both barack obama, president obama and the republican congress, have to be into legacy-building. president obama is into building a legacy and solving the problems and also the republican congress now has to be about diversity and be part of the solution. part of the problem that we had in this campaign is that we were running, we had a candidate that was running against barack obama, but that was not as good in articulating his own vision and showing what he stood for. we can't just be against something. we have to stand for something. we have to have an optimistic vision for the future of america, and i think that's something that's going to appeal to all sorts of people. >> you say you're watching also how the gop handles immigration. listen to florida senator marco rubio, a possible presidential candidate, who knows in, 2016. listen. >> it's really hard to get people to listen to you on economic growth, on tax rates, on health care if they think you want to deport their

grandmother. >> how does, anna, the gop get past this to appeal to latinos who want job growth, who have in many cases conservative social values, who could really be republican in many, many ways. >> i think marco rubio is absolutely right, and i think bobby jindal says it exactly the right way also a few weeks ago. you know, voters want to vote for somebody that likes them. we need to have the right policy, but we also need to have the right tone, the right message and the right messenger. the truth is we didn't have that in this election, but i think there are people like a marco rubio, like a bobby jindal and a jeb bush who do understand, who are going to put effort and the long-term campaign outreach for hispanic voters, and i think the best thing we can do, christine, is solve the immigration issue. remove it as a wedge issue that is used by both sides. right now the immigration issue is a wedge issue that democrats

have effectively used as a political tool in campaigns to, you know, to divide republicans from latinos and to make it so that it becomes impossible for republicans to talk about the rest of the agenda because latinos feel that, you know, immigration is being spoken in a hostile antagonistic tone. that's got to change completely. >> i agree with you completely on the immigration issue especially when you talk about the tone and the republicans coming off with antipathy as latinos. that has to be fixed. however, we need to be careful in assuming that latinos are overly focused on immigration when back to my main message, middle class economics. many latinos find themselves disproportionately in economically insecure situations and that democratic message of here's what i can do to help you out versus the be a strkt philosophy of free markets, and here's a challenge of how our

economic message helps everyone. >> you're absolutely right, but marco rubio's point is absolutely correct. >> anna navarro, will cain, really nice to see you guys. have a nice weekend. >> thank you. >> coming up next, one of the most popular deductions you claim on your taxes, it could be disappearing. we'll give you the facts, but first in what year did the popular mortgage interest deduction first become a part of tax code? was it 1913, 1934 or 1973? and no googling. gives you a low $18.50 monthly plan premium... and select generic hypertension drugs available for only a penny... so you can focus on what really matters. call humana at 1-800-808-4003. gives you 1% cash back on all purchases, plus a 50% annual bonus.

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but it's costing the government $80 billion this year and will reach $100 billion by 2014 making it the third largest tax expenditure according to the congressional research service. who is it really helping in the most recent irs tax data show 41 million people claim this deduction on their 2010 taxes, but the tax policy center points out it tends to benefit upper middle class families the most. for those with annual incomes of less than $40,000 a year, the average tax savings is just 91 bucks. for the people earning $250,000 a year, the annual tax savings runs about $5,500, and critics say it's not really helping to boost homeownership. going to talk to one of them in a moment. the homeownership rate in the u.s. is now about 65%. it was up near 70% during the housing boom in 2005 and 2006. now we're back to levels we last saw in the 1990s. yes, the great recession is partly to blame, but the fact is we're stuck in this 64% to 69%

homeownership range. robert reich is a professor of public poliicy and a former secretary of labor and he's author of "beyond outrage," what's gone wrong in our economy and how to fix. it should the interest mortgage deduction stay or go? >> well, it should be limited, i believe. you can't get rid of it. politically it's almost impossible but economically if you simply get rid of it all together the housing market would take a big hit. a lot of people, particularly lower middle class people would find that they had made investments assuming one kind of tax structure, and they now discovering a very different kind of tax structure that's less advantageous to them, but if you limit it to say $30,000 a year, that is, you couldn't take a mortgage interest deduction on more than interest payments of $30,000 a year, you would thereby save the government a lot of money and generate a lot

of additional revenues and not put any impact or put any imposition on the middle class, but it would mean for tax revenues from the wealthy. >> no question that this is a tax goody, call it the most cherished middle class tax cut, 41 million homeowners used it last year, but it predominantly benefits richer americans. >> yes, it does, and that's why i would say a $25,000 or $30,000 cap would limit it to the middle class and lower middle class. remember, one-third of americans or more don't even own their home. they don't even have a mortgage. they rent. they don't get any tax advantage at all out of renting, so what you really want to do is limit the mortgage interest deduction to the middle clarks lower middle class to people who are homeowners or people who would like to own a home. >> the u.s. housing industry, a lobbyist warning washingto keep your hands off the mortgage

interest deduction telling cnn money, quote, getting rid of it would throw the housing sector into turmoil and chill the market just as it's trying to recover. the government must be careful as you pointed out. come from a very deep bottom. recovery is very fragile, tinkering around the edges, limiting it, would that hurt the housing market? >> i don't think it would be. the upper end of the housing market, we're talking about a limit of $25,000 to $30,000 a year will not deter very wealthy buyers and investors from getting into the housing market. you know, if you got rid of the mortgage interest deduction all together, you would have a negative impact on home buying, again imposing on the middle class and imposing on people who have seen their incomes actually decline in real terms, adjusted for inflation over the past 10, 15 years, but putting a limit on the upper income ability to deduct for mcmahon shops, why not >> i want to look at what's actually on the table right now for fiscal cliff negotiations,

deficit reduction. not hearing specifically about mortgage interest deduction but hearing about closing the loopholes. republicans say this is what's on the table from the white house. raising marginal tax rates on the very rich. extending both the social security payroll tax break and unemployment benefits for next year. the government wants to -- the white house wants to defer the sequester for a year and then launch this new multi-year stimulus package that would be at least $50 billion last year, infrastructure spending. also get this, a permanent increase in the debt limit, and they would take the debt ceiling approval away from congress. robert reich, do you have any problems with all of these things? >> well, most of them are steps in the right direction. i think that actually taking the debt ceiling approval away from congress sounds radical but it really isn't. that's a technicality. you don't want the debt ceiling ever to be negated. you are don't want congress to ever say no because that's the full faith and credit of the united states. that's what we went through

before. a moderate stimulus in the range of $50 billion, at least until we get jobs back and until the economy gets back on track, that makes a lot of sense, and then you want to do serious deficit reduction. >> robert reich, so nice to see you. thanks for joining us. have a great weekend. >> thanks very much, you, too. if you think our government's debt problem is overwhelming, wait until you hear about how much credit cards and debt this family rocked up. evenmore amazing, unlike the federal government, they were able to dig themselves out of it. >> christmas, that was my biggest downfall. i wanted something nice to bay for all of the kids, and i don't like saying no to my babies. w broadway show megapixels place to sleep >> their story when we return. le deep sea diving ninja app hipster glasses 5% cash back sign up to get 5% everywhere online through december. only from discover. side by side so you get the same coverage, often for less. that's one smart board.

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marriage, a house, a couple cars, children. all part of the american dream, right? that's if you can afford all those things. we found one family who managed to have it all but they racked up nearly $100,000 in debt obtaining it. now they're back in the plus column. here's how they did it. the baileys are hard working and modest. a minister and nurse. >> count your coupons. planning your meals. >> each had children from a previous marriage, six all together, and with a big family, there were big bills. >> we had major repairs on the house and the cars, like a new transmission, those kinds of things. and just over a period of time, we amassed more and more credit cards. >> 13 years later, the couple was overwhelmed by debt. $92,000 in the red spread over

17 credit cards with interest rates as high as 30%. the baileys' story is an extreme example, but more than 30% of u.s. families have four or more credit cards and the average american household carries nearly $16,000 on their cards. in total, americans owe $852 billion in credit card debt. >> we felt like we were in jail. just as if there had been real bars all around us. >> many in the baileys' situation would have considered bankruptcy. but for them, it wasn't an option. >> the debt was mine. it wasn't everybody's out there. and when you bankrupt, it affects other people. >> uh-huh. >> innocent people. and so it was our responsibility and we knew we were the ones who had to do something with our debt. >> they worked with a reputable non-profit credit counselling agency and entered a debt management program. >> you look at what their deals are as far as paying their

mortgage, utilities and then we look at their debts, who they pay money to, what type of debt it is. >> the agency contacted creditors who waived late fees. the baileys had to use cash for essentials and make a weekly payment of $665 toward the debt. they made sacrifices and both took on extra work. fast forward five and a half years and the couple is debt-free and just months away from paying off their mortgage. >> it felt like the weight of the world had been taken off of our shoulders. such a sense of freedom. exhilaration. it was a wonderful feeling to know that we had accomplished that. >> wow. can you imagine paying off $92,000 in credit card debt? home repairs and a new transmission, they may be necessary expenses, but many out there are swiping their credit cards for stuff they don't need. call me a grinch, but all those great deals during the holiday shopping season bring out some of the worst consumer behavior.

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it's the new washington code word. >> a balanced approach. >> we should have a balanced approach. >> we want a balanced approach. >> thanslation -- we have to cut spending and raise taxes. that's what it takes within our means. balanced approach, like a balanced diet. you know, where you're supposed to eat your broccoli, but it doesn't make it any easier to swallow. especially when both parties have been gorging on sweets for the past 20 years. their balanced approach will be a real balancing act. at one side, you have lobbyist grover nordqvist equating his anti-tax pledge to a marriage vow. >> i hope his wife understands that commitments understand a little longer than two years or something. >> on the other hand, you have entitlement sacred cows. >> the social security is a separate thing. it does not add a penny to the debt. >> and balance -- well, balance

will take adult supervision. that's the sound of a baby crying. and most americans think congress is little better than a crying baby. 2/3 of americans surveyed think our lawmakers will act like spoiled children in the upcoming fiscal cliff negotiations. 67% expect cringe-worthy immaturity. they don't have much faith in the congress, and they're crying out for a balanced approach. the same poll found 67% want a budget deal with a mix of spending cuts and tax increases, not just spending cuts alone. back to that pledge. that pledge never to raise taxes. the rose grover nordqvist -- they aren't in this pledge. >> i pledge allegiance to the flag of the united states of america. >> and a few brave lawmakers are beginning to acknowledge that their constituents may want flexibility. >> i answer to my constituents, not to a pledge. my constituents certainly don't want me to come to washington to raise their taxes, but